Return on Equity
Another performance ratio used in business is return on equity. It is similar to return on assets except return on equity uses one section of the bottom half of the balance sheet.
Operating Cash Ratio – Formula and Understanding
Unlike the other liquidity ratios that are balance sheet derived, the operating cash ratio is more closely connected to activity (income statement).
Operating Cash Ratio – Formula and Understanding Read More »
Operating Profit Margin – Formula and Understanding
Operating profit margin refers to the value earned as a percentage of net sales. The operating profit is often referred to as earnings before interest, taxes, depreciation and amortization, (EBITDA).
Operating Profit Margin – Formula and Understanding Read More »
Total Assets Turnover Rate – Formula and Analysis
Within the group of activity ratios, the total assets turnover rate is the broadest in scope. Similar to other activity ratios, it utilizes net sales as the numerator.
Total Assets Turnover Rate – Formula and Analysis Read More »
Fixed Assets Turnover Rate
The fixed assets turnover rate is another activity ratio whereby an income statement financial characteristic is compared to a balance sheet asset section.
Fixed Assets Turnover Rate Read More »
Working Capital Turnover
Activity ratios measure performance of a current asset on the balance sheet. The working capital turnover is the most encompassing of all the activity ratios.
Working Capital Turnover Read More »
Cash Ratio
The cash ratio is a much more effective tool for small business than the traditional current or quick ratio.
Accounts Receivable Turnover Ratio
One of the activity ratios in business is the receivables turnover ratio or rate; it measures the frequency of collecting the entire balance of accounts receivable.
Accounts Receivable Turnover Ratio Read More »
Net Profit
No other business term is so misunderstood, misstated, misleading or deceiving as the words ‘net profit’.